Connexus Energy starting solar project

Published June 19, 2014 at 3:00 pm

By this fall, any Connexus Energy residential member can have access to solar power for a one-time $950 fee that is good for 20 years.

The 792 ground-mounted solar panels that Connexus Energy is adding to its Ramsey campus this summer will take up the equivalent space of a football field. Groundbreaking will happen later this month and the system should be on-line by September. Courtesy of Connexus Energy

With 792 solar panels at a total output of 245 kilowatts taking up enough space to cover a football field on its Ramsey campus, SolarWise is expected to be the largest cooperative solar project in the state of Minnesota, according to Don Haller, Connexus’ vice president of member services and community relations.

While there are larger solar projects in Minnesota that are part of a company’s electrical grid provided to all customers, Connexus’ project will only be financed by the people who want this solar energy for their own homes. It will not be available for businesses or government buildings.

“This allows all residential customers to be part of the solar market,” Haller said. “It goes back to the strong response in the fall we got from residents.”

Haller and Mike Bash, chief financial officer, said Connexus would have not proceeded had it not been for the fact that 34 percent surveyed last fall indicated they were interested in receiving energy output from a community solar garden, with 9 percent showing “strong” interest.

The survey, which did not ask how much they would be willing to pay, was mailed to 1,549 members and 316 were returned. The margin for error for this survey was 5.5 percent, according to Haller. Connexus serves approximately 126,000 members in all of Anoka County and part of Chisago, Hennepin, Isanti, Sherburne and Washington counties.

According to Haller, interested members would pay a one-time up-front fee of $950 per panel. Connexus is limiting each household to no more than six panels, so it can get as many households involved as possible.

There are zero annual fees. Bash said the $950 covers the projected construction costs as well as maintenance, insurance, legal and marketing expenses over the next 20 years.

“As a result, the SolarWise project will not be shifting any costs to other members,” Bash said.

Bash and Haller are confident they will sell all 792 panels so that other non-members, but a $370,000 investment by Federated Rural Electric Insurance Exchange does give the project another initial boost. Connexus pays no income taxes, so it would not be eligible for a 30 percent initial investment tax credit. This insurance company will benefit from the tax credit and accelerated depreciation over the next six years. After that, Connexus Energy will fully own the 792 solar panels.

A philosophical, not financial, decision

Those who expressed interest in the SolarWise program after reading a Star Tribune article were invited to a June 6 Connexus Energy open house. Bash said they are planning to ramp up marketing as groundbreaking happens later this month to install the Canadian Solar panels.

“We decided we would buy before we walked in,” said Al Angell with his wife Rowena by his side at the open house.

East Bethel couple Al and Rowena Angell signed up for one solar panel after a June 6 open house. Any Connexus Energy customer can sign up at a cost of $950 per panel, which will cover all construction, maintenance and insurance costs over the next 20 years so that other Connexus Energy customers are not subsidizing the SolarWise program. Photo by Eric Hagen

The Angells have lived in a single-family home in East Bethel since 1984. What sold them is that a portion of the electricity generated for their home would not be coming from coal-fired power plants or nuclear plants.

According to Haller, participating members will be credited on their monthly bills based on how many kilowatt-hours their panel(s) produce each month. It is less effective in the winter because of the low sun angle and there are usually more cloudy days.

One solar panel will generate an average of 34 kWh per month, Haller said. The average home uses 800 to 850 kWh per month throughout the year. Even if a household purchased the maximum allowed six panels, it would be not enough to power a home.

Another man at the open house said he has five people in his home and they use 1,000 to 1,200 kWh per month. He said he was surprised by how little the output of the panels is and asked if Connexus would upgrade to newer panels as technology improves over the next 20 years. He and others also had questions on whether they would save on sales tax and how it was determined that the average monthly output would be 34 kWH.

Even if the solar panels had to be replaced with insurance money after a hailstorm, the same type of panels would go in. Any upgraded panels would require a new study and possibly new fees. The state of Minnesota still gets the same sales tax money. There are online resources to calculate solar panel output based on historical weather data for a region, according to Bash.

Bash said the payback on solar power investment is much better than it used to be and these members will benefit from economies of scale. Members who stick with it could earn their $950 back within 16 years if electric prices increase 3 percent per year. If prices increased 5 percent per year, payback is 14 years.

The catch is, Bash cannot predict electric rates over the next 20 years and his job is to keep increases as minimal as possible. Bash emphasized that SolarWise members will pay the same rates as everyone else, but increasing rates means the average 34 per kWh credit is more valuable.

“Don’t think of this as an investment,” Bash said.

The main benefit is this gives every resident an equal chance at solar, according to Haller. There are no townhome, condo or apartment restrictions to worry about because all the hardware is on the north side of Connexus’ Ramsey campus on the southeast corner of Bunker Lake and Ramsey boulevards. The panels will be visible along Bunker Lake Boulevard, but will face Connexus’ building so neighbors would not be affected by any glare, according to Haller.

The only hassle is when you move.

If you relocate within Connexus’ service area, you could transfer your SolarWise membership to your new home.

If you move outside the service area, you could try to sell your solar panel production to another Connexus customer. If you do not find a buyer, you could sell the panel(s) back to Connexus, but Bash said it would be at a discount to the remaining value of the agreement.

Connexus Energy has its own exit clause. If its leaders within the next 20 years feel this project is no longer viable, it would pay customers a premium to purchase the remaining value on their contract, according to Bash.

Cathy and John Calabrese have contemplated solar panels for the Blaine single-family home they have lived in since 1972, but the expense and hassle was too great.

“In our mind, it was about buying some solar. It wasn’t about saving any money,” John Calabrese said.